UK higher education generates ?73 billion for the economy and contributes 2.8 per cent of the nation¡¯s total gross domestic product, according to a Universities UK report.

The sector is ¡°comparable in size to the legal services sector¡± and ¡°considerably larger than computer manufacturing, the basic pharmaceuticals sector and the air transport industry¡±, according to The Impact of Universities on the UK Economy, published on 3 April.

UUK says that at ?73 billion, the sector¡¯s output ¨C covering direct and secondary impacts ¨C is up 24 per cent from the ?59 billion figure that it calculated in a 2009 study, although the figures are not adjusted for inflation.

The report estimates that the sector generated ?10.7 billion of export earnings for the UK when on- and off-campus spending by non-UK students is taken into account.

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Sir Christopher Snowden, UUK president, said: ¡°With the 2015 general election on the horizon, this report serves as a timely reminder to policymakers of universities¡¯ growing impact on local communities, jobs and the wider economy.¡±

In his foreword to the report, he writes that there is ¡°a continued need for sustained government investment in higher education for teaching, research and capital. There is also a need for the government to ensure that non-EU students see the UK as a welcoming and attractive destination for study.¡±

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As well as direct expenditure by higher education institutions ¨C the biggest item of which is their staff ¨C the report takes into account secondary effects, notably the spending of staff and international students.

¡°Through both direct and secondary or multiplier effects, the higher education sector generated over ?73.11 billion of output and 757,268 full-time equivalent jobs throughout the economy. The total employment generated was equivalent to around 2.7 per cent of all UK employment in 2011,¡± it says.

On the sector¡¯s contribution to GDP, UUK gives a figure of ?39.9 billion, equivalent to 2.8 per cent of the UK¡¯s 2011 GDP (up from 2.3 per cent of GDP in the 2009 study).

This reinforces the point, the report argues, that ¡°higher education¡¯s contribution to GDP is countercyclical. That is to say universities will tend to grow less than the economy as a whole in boom times but also decline less in recession. In this way the higher education sector makes an important contribution to macroeconomic stability.¡±

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john.morgan@tsleducation.com